Lenders, trainers and aggregators pioneer new methods to help brokers work ‘on the business’.
Professional development is moving beyond chasing CPD hours as lenders, trainers and aggregators pioneer new methods to help brokers work ‘on the business’
Is broker education “manifestly inadequate”? Those were the words used by the Consumer Credit Service WA in its submission to the Parliamentary Joint Committee on Corporations and Financial Services, complaining about incompetent brokers.
Unsurprisingly, the industry didn’t agree, but more surprisingly, the ensuing debate focused less on the minimum qualification, the Certificate IV, and more on professional development. Peter Sullivan, general manager of Astute, told Australian Broker magazine that “it is more important in broking that there is ongoing education of a high standard”, while Jeremy Fisher of 1st Street Home Loans wanted to see “more cooperation and a more uniform approach between our industry bodies to lift the standards of mentoring and ongoing professional development”.
It’s been just over four years since the MFAA went above government requirements to demand a diploma from its members, a move widely criticised at the time and blamed for an exodus of brokers from the industry. MPA asks: Have attitudes to personal development moved on since then? And what options are there for those brokers who do want to expand their skill set?
WHY THE CERTIFICATE IV DOESN’T CUT IT
To answer these questions, we first need to go back to basics: the Certificate IV, diplomas and new-broker entry schemes. In a recent article for Australis College (formerly Intellitrain) founder Paul Eldridge argued that “the industry is being let down by short-term thinking and training providers willing to cater to demands for ‘fast and cheap’ education”.
Eldridge delivered a damning message to brokers: “It seems that the industry places so little value on the quality of education being provided by education providers that qualifications are viewed as just a piece of paper that has to be purchased prior to getting on with the real work – ie it’s just a ‘ticket to operate’.”
Such attitudes, if they exist, don’t sound reflective of an education-orientated industry. Short timeframes (as low as three weeks for a Certificate IV) and low costs are undermining the value of the qualification, Eldridge claims, adding that ‘shopping on price’ reflected fundamental doubts about the Certificate IV. “Those who do not know how to really sell themselves or who don’t actually value what they provide will often try to compete for business on price,” he says. “So, we have seen RTOs drop and drop their prices in order to win
WHY THE CERTIFICATE IV DOESN’T CUT IT
To answer these questions, we first need to go back to basics: the Certificate IV, diplomas and new-broker entry schemes. In a recent article for Australis College (formerly Intellitrain) founder Paul Eldridge argued that “the industry is being let down by short-term thinking and training providers willing to cater to demands for ‘fast and cheap’ education”.Eldridge delivered a damning message to brokers: “It seems that the industry places so little value on the quality of education being provided by education providers that qualifications are viewed as just a piece of paper that has to be purchased prior to getting on with the real work – ie it’s just a ‘ticket to operate’.”
Such attitudes, if they exist, don’t sound reflective of an education-orientated industry. Short timeframes (as low as three weeks for a Certificate IV) and low costs are undermining the value of the qualification, Eldridge claims, adding that ‘shopping on price’ reflected fundamental doubts about the Certificate IV. “Those who do not know how to really sell themselves or who don’t actually value what they provide will often try to compete for business on price,” he says. “So, we have seen RTOs drop and drop their prices in order to win
business.”
A number of recent programs suggest that ‘entry level’ now means far more than a Certifi cate IV. The FBAA, partnering with Australis College, offers scholarships for potential brokers that include a diploma and much more – an interesting move, given the FBAA still doesn’t demand a diploma from their members. Worth $16,900, the FBAA/ Australis College package includes unlimited one-to-one support, two years of mentoring and a large number of additional professional development workshops on subjects like SMSF.
Franchise brokerage eChoice (owned by Firstfolio) recently launched its own new-entrants ‘graduate program’ – with a Certificate IV required to enter. Including a six-week ‘boot camp’ and mentoring and support thereafter, the program “[is] modelled on more traditional university graduate programs that are integrated into the practices of other professions”, says head of HR Linda Cooper. The Certificate IV “provides that foundation of theory; we’re layering something on top of that, a structured program to give you practical skills”.
BUILDING AN APPETITE
If there is a ‘ticket-to-operate’ mentality, it certainly doesn’t seem to be apparent among established brokers. In fact, the participants in MPA’s recent Major Bank Roundtable believed quite the opposite: ANZ’s Keiran Evans emphasised that brokers’ attendance and appetite at his events was “phenomenal”, while Sam Boer of Commonwealth Bank commented that “whenever we put out a series, it’s oversubscribed, so the appetite is there”.
Professional development has, in past years, been heavily associated with continuing professional development [CPD] hours, 30 of which brokers must accrue every year. However, the aggregators MPA spoke to for this feature argued that demand for CPD hours alone didn’t explain the increasing appetite for education they were seeing.
“There’s been a real shift, from my perspective,” explains Choice CEO Stephen Moore, “from treating professional development as CPD hours, to a recognition that ‘to be successful in business, I need to move beyond just technical skill and continue to tune up my business management skills’.”
Murray Lees of Connective insists the CPD hours system is still effective and respected: “[Brokers say], ‘I want to get these points and I want them to mean something as well’; from our point of view, we want real quality rather than writing something just to get points across the line. I think it’s important that points are a part of it, but not the major part.”
While CPD hours are mandatory, aggregators are looking for genuine engagement from their brokers. Lees argues that Connective’s opt-in business model is particularly effective for this purpose: “They opt into whatever services we provide that they actually want to do … if you prefer to do face-to-face, we can do that, or if you prefer webinars, we can do that as well ... how you deliver education is critical; everyone has their different time constraints and preferences for learning material.”
A shift also has occurred in the content of learning courses. “In our PD days, we absolutely avoid it being too much about loan-to-value ratio, not too much about products and interest rates,” Lees explains. “We get people who have nothing to do with finance talking about how they’ve been successful in their areas, and the broker can take that and apply it to what they’re doing.”
‘Rock solid’ product knowledge is still important, Lees insists, but he suggests that aggregators are perhaps not best positioned to provide it. “Lenders have certainly ramped it up, working directly with brokers, and are doing that side of it really well,” he says. “Our side is about talking to them as small business owners and how they can improve their small business.”
LENDERS AND E-LEARNING
Lenders and aggregators have been co-operating for years to put on informative sessions for brokers. However, lenders are increasingly stepping up to provide formal education and advice themselves, presenting new opportunities for brokers.
Pepper’s Better Business program was launched in early 2013 as an “e-learning hub” offered free to Pepper-accredited brokers. It consists of a series of online videos and questionnaires, arranged into modules, based on various topics. Developed alongside brokers, the MFAA and online course creator SalesDNA.com. au, the Better Business program also offers CPD hours to brokers who complete the modules.
With 1,800 of Pepper’s approximately 8,000 brokers having completed modules so far, Mario Rehayem, Pepper’s director of sales and distribution, is confident the material on the Better Business hub is popular with brokers. “There are subjects out there that people do because they have to. These subjects that we’ve chosen really have to do with actual development of your skill set,” he says.
Those subjects include interviewing clients, building relationships, value propositions and business plans. In August 2014, Pepper added a module on specialist lending to the hub, and is planning a number of new additions in 2015, with topics like alternative docs and understanding financials particularly likely to appear.
“The largest Achilles heel of a broker usually is that they’re time poor,” Rehayem explains. “[The Better Business hub is] all video modules. They can pause and come back to them, so they don’t have to watch the whole thing again. So it’s really designed around a mortgage broker’s needs.”
MPA got access to the Better Business hub and found the interface surprisingly similar to services like YouTube or Netflix.
Where is the business logic behind Pepper’s Better Business hub? The lender has been heavily advertising the program, yet its first four modules were not directly related to specialist lending. “It is a very costly exercise,” Rehayem admits. “People don’t realise that the hardest part of broker education for a lender, especially someone like Pepper, is you can’t align that with a return on investment.”
It comes down to Pepper’s value proposition, he explains: “The way we’ve factored in the education program is, we believe it’s something we’d like to give as a value-add to the broker industry, rather than trying to get business from it. That’s a big call to make.”
PROFESSIONAL DEVELOPMENT FOR EXPERIENCED BROKERS
Pepper is not the only lender prepared to make that call. For more experienced brokers, programs like Commonwealth Bank’s Kaizen and Lean workshops offer a mix of learning and business consultancy tailored to their brokerages.
CBA’s workshops are mainly about processing and office management, which attracts more seasoned brokers, notes Sam Boer, CBA’s general manager of broker sales. “Rookie brokers are focussing on the home loan sale process, understanding a lender’s products, credit policy and processes … an experienced broker is looking at managing the complexities of their business – recruiting and training staff, managing referral partners and lender relationships while keeping new and existing customers happy.”
Lean workshops are one-day events, and Kaizen workshops take up to five days. Raymond Xue of ACA Mortgage Solution, the number-one broker in MPA’s recent Top 100 Brokers survey, says the Kaizen program encouraged him to make extensive changes to his office. Previously, applications passed through several separate staff members; now each application is handled by a single staff member, which had beneficial consequences for customer relationship management.
CBA’s program reflects the maturing of many broker businesses like Xue’s. “Many small businesses grow from a single operator who then expands by employing more staff,” Boer says. “Staff training is done ‘on the job’, and there are few documented processes … a Lean workshop such as the Value Stream Map will analyse processes and produce a flow chart of the activities, including the service flow, information flow, and time and quality metrics. This leads to a standard procedure for that activity, which existing and new staff can follow, leading to increased efficiencies.”
The workshops are far from cheap and are targeted at brokerages struggling to handle large numbers of deals, rather than small brokerages trying to improve their numbers. CBA argues that the fee helps show commitment, and claims that workshops “are so transformational for a business that any costs incurred and the perceived ‘lost time’ of the participants is paid back many times over”. They also point out that the bank runs a standard range of PD activities in addition to the Kaizen and Lean programs.
Webinars & E-Learning (Click to enlarge)
PEER-TO-PEER LEARNING
The gulf between Pepper’s flexible online learning and CBA’s intense consultancy sessions illustrates perhaps the greatest challenge for professional development providers: how to cater to brokers of wildly varied levels of experience at a cost acceptable to all.
One aggregator who believes they have found the answer is Choice Aggregation Services, and their preferred approach is peer-to-peer learning. “[It’s] at the very core of our philosophy,” CEO Stephen Moore explains. “The reason why is that all brokers can benefit from it.”
He claims that through peer-to-peer learning, Choice has combined the benefits of scale with individual tailored advice.
For almost three years, Choice has been running sessions – around 110 a year, Moore estimates – in which brokers can have their businesses assessed by their peers and receive feedback, a process Moore describes as “enormously powerful” for business people. These groups typically include around 10 brokers, usually accompanied by an expert – ideally, an experienced broker within the industry, but occasionally a lender or external advisor.
Choice is not the only industry organisation to promote peer-to-peer learning. Connective runs networking breakfasts and roundtables of elite brokers, for example, which Lees explains have both networking and educational purposes. “Because it’s an open forum, you get some cross-pollination of ideas; brokers are really, really good at sharing what they are doing well,” Lees says.
What’s particularly interesting about Choice is the degree to which they’ve integrated peer-topeer learning into their company culture. It’s a concept that’s instilled from day one, Moore explains. “When we’re talking to members, we ask them to come along to one of our events to have a look ... it’s a core part of when we speak to any new brokers,” he says. Indeed, the very success of the method rests on Choice members helping out. As Moore puts it, “the challenge of peer-to-peer learning is that it’s only as good as the willingness to get involved”.
Therefore, sessions are heavily directed by broker feedback; individuals can suggest topics, and Choice will invite certain brokers to attend. Through this, and brokers’ own self-selection, groups can be aimed at brokers of certain ability levels. Moore mentions local marketing and social media as popular topics for 2015, but also notes that peer-to-peer co-operation now occurs without his prompting: A closed Choice Facebook group allows members to ask each other for advice.
MATURE EDUCATION FOR A MATURE INDUSTRY
In a sense, professional development in the industry has come full circle, from compulsory CPD hours to brokers driving and even conducting their own education. But there’s also been a shift in outlook by some lenders and aggregators, from treating education as a classroom exercise to recognising and respecting increasingly mature and established brokerage businesses.
At their core, all these development methods revolve around flexibility, whether that be fitting learning around business hours with online tools or, conversely, bringing experts into the office. They also are driving improved standards at the entry level, with some training providers and entry-level employers offering far more than the Certificate IV skills demanded by the government.
Pepper’s Rehayem certainly believes so. “If you compare the industry to five years ago, it’s chalk and cheese,” he says. “It’s in a much better position than it has ever been.”
It’s a natural development, concludes Choice’s Moore: “a real recognition that you need to run your business as a business ... it’s a really exciting time for our industry, as they’re becoming true professionals”.
A number of recent programs suggest that ‘entry level’ now means far more than a Certifi cate IV. The FBAA, partnering with Australis College, offers scholarships for potential brokers that include a diploma and much more – an interesting move, given the FBAA still doesn’t demand a diploma from their members. Worth $16,900, the FBAA/ Australis College package includes unlimited one-to-one support, two years of mentoring and a large number of additional professional development workshops on subjects like SMSF.
Franchise brokerage eChoice (owned by Firstfolio) recently launched its own new-entrants ‘graduate program’ – with a Certificate IV required to enter. Including a six-week ‘boot camp’ and mentoring and support thereafter, the program “[is] modelled on more traditional university graduate programs that are integrated into the practices of other professions”, says head of HR Linda Cooper. The Certificate IV “provides that foundation of theory; we’re layering something on top of that, a structured program to give you practical skills”.
BUILDING AN APPETITE
If there is a ‘ticket-to-operate’ mentality, it certainly doesn’t seem to be apparent among established brokers. In fact, the participants in MPA’s recent Major Bank Roundtable believed quite the opposite: ANZ’s Keiran Evans emphasised that brokers’ attendance and appetite at his events was “phenomenal”, while Sam Boer of Commonwealth Bank commented that “whenever we put out a series, it’s oversubscribed, so the appetite is there”.
Professional development has, in past years, been heavily associated with continuing professional development [CPD] hours, 30 of which brokers must accrue every year. However, the aggregators MPA spoke to for this feature argued that demand for CPD hours alone didn’t explain the increasing appetite for education they were seeing.
“There’s been a real shift, from my perspective,” explains Choice CEO Stephen Moore, “from treating professional development as CPD hours, to a recognition that ‘to be successful in business, I need to move beyond just technical skill and continue to tune up my business management skills’.”
Murray Lees of Connective insists the CPD hours system is still effective and respected: “[Brokers say], ‘I want to get these points and I want them to mean something as well’; from our point of view, we want real quality rather than writing something just to get points across the line. I think it’s important that points are a part of it, but not the major part.”
While CPD hours are mandatory, aggregators are looking for genuine engagement from their brokers. Lees argues that Connective’s opt-in business model is particularly effective for this purpose: “They opt into whatever services we provide that they actually want to do … if you prefer to do face-to-face, we can do that, or if you prefer webinars, we can do that as well ... how you deliver education is critical; everyone has their different time constraints and preferences for learning material.”
A shift also has occurred in the content of learning courses. “In our PD days, we absolutely avoid it being too much about loan-to-value ratio, not too much about products and interest rates,” Lees explains. “We get people who have nothing to do with finance talking about how they’ve been successful in their areas, and the broker can take that and apply it to what they’re doing.”
‘Rock solid’ product knowledge is still important, Lees insists, but he suggests that aggregators are perhaps not best positioned to provide it. “Lenders have certainly ramped it up, working directly with brokers, and are doing that side of it really well,” he says. “Our side is about talking to them as small business owners and how they can improve their small business.”
Lenders and aggregators have been co-operating for years to put on informative sessions for brokers. However, lenders are increasingly stepping up to provide formal education and advice themselves, presenting new opportunities for brokers.
Pepper’s Better Business program was launched in early 2013 as an “e-learning hub” offered free to Pepper-accredited brokers. It consists of a series of online videos and questionnaires, arranged into modules, based on various topics. Developed alongside brokers, the MFAA and online course creator SalesDNA.com. au, the Better Business program also offers CPD hours to brokers who complete the modules.
With 1,800 of Pepper’s approximately 8,000 brokers having completed modules so far, Mario Rehayem, Pepper’s director of sales and distribution, is confident the material on the Better Business hub is popular with brokers. “There are subjects out there that people do because they have to. These subjects that we’ve chosen really have to do with actual development of your skill set,” he says.
Those subjects include interviewing clients, building relationships, value propositions and business plans. In August 2014, Pepper added a module on specialist lending to the hub, and is planning a number of new additions in 2015, with topics like alternative docs and understanding financials particularly likely to appear.
“The largest Achilles heel of a broker usually is that they’re time poor,” Rehayem explains. “[The Better Business hub is] all video modules. They can pause and come back to them, so they don’t have to watch the whole thing again. So it’s really designed around a mortgage broker’s needs.”
MPA got access to the Better Business hub and found the interface surprisingly similar to services like YouTube or Netflix.
Where is the business logic behind Pepper’s Better Business hub? The lender has been heavily advertising the program, yet its first four modules were not directly related to specialist lending. “It is a very costly exercise,” Rehayem admits. “People don’t realise that the hardest part of broker education for a lender, especially someone like Pepper, is you can’t align that with a return on investment.”
It comes down to Pepper’s value proposition, he explains: “The way we’ve factored in the education program is, we believe it’s something we’d like to give as a value-add to the broker industry, rather than trying to get business from it. That’s a big call to make.”
PROFESSIONAL DEVELOPMENT FOR EXPERIENCED BROKERS
Pepper is not the only lender prepared to make that call. For more experienced brokers, programs like Commonwealth Bank’s Kaizen and Lean workshops offer a mix of learning and business consultancy tailored to their brokerages.
CBA’s workshops are mainly about processing and office management, which attracts more seasoned brokers, notes Sam Boer, CBA’s general manager of broker sales. “Rookie brokers are focussing on the home loan sale process, understanding a lender’s products, credit policy and processes … an experienced broker is looking at managing the complexities of their business – recruiting and training staff, managing referral partners and lender relationships while keeping new and existing customers happy.”
Lean workshops are one-day events, and Kaizen workshops take up to five days. Raymond Xue of ACA Mortgage Solution, the number-one broker in MPA’s recent Top 100 Brokers survey, says the Kaizen program encouraged him to make extensive changes to his office. Previously, applications passed through several separate staff members; now each application is handled by a single staff member, which had beneficial consequences for customer relationship management.
CBA’s program reflects the maturing of many broker businesses like Xue’s. “Many small businesses grow from a single operator who then expands by employing more staff,” Boer says. “Staff training is done ‘on the job’, and there are few documented processes … a Lean workshop such as the Value Stream Map will analyse processes and produce a flow chart of the activities, including the service flow, information flow, and time and quality metrics. This leads to a standard procedure for that activity, which existing and new staff can follow, leading to increased efficiencies.”
The workshops are far from cheap and are targeted at brokerages struggling to handle large numbers of deals, rather than small brokerages trying to improve their numbers. CBA argues that the fee helps show commitment, and claims that workshops “are so transformational for a business that any costs incurred and the perceived ‘lost time’ of the participants is paid back many times over”. They also point out that the bank runs a standard range of PD activities in addition to the Kaizen and Lean programs.
Webinars & E-Learning (Click to enlarge)
PEER-TO-PEER LEARNING
The gulf between Pepper’s flexible online learning and CBA’s intense consultancy sessions illustrates perhaps the greatest challenge for professional development providers: how to cater to brokers of wildly varied levels of experience at a cost acceptable to all.
One aggregator who believes they have found the answer is Choice Aggregation Services, and their preferred approach is peer-to-peer learning. “[It’s] at the very core of our philosophy,” CEO Stephen Moore explains. “The reason why is that all brokers can benefit from it.”
He claims that through peer-to-peer learning, Choice has combined the benefits of scale with individual tailored advice.
For almost three years, Choice has been running sessions – around 110 a year, Moore estimates – in which brokers can have their businesses assessed by their peers and receive feedback, a process Moore describes as “enormously powerful” for business people. These groups typically include around 10 brokers, usually accompanied by an expert – ideally, an experienced broker within the industry, but occasionally a lender or external advisor.
Choice is not the only industry organisation to promote peer-to-peer learning. Connective runs networking breakfasts and roundtables of elite brokers, for example, which Lees explains have both networking and educational purposes. “Because it’s an open forum, you get some cross-pollination of ideas; brokers are really, really good at sharing what they are doing well,” Lees says.
What’s particularly interesting about Choice is the degree to which they’ve integrated peer-topeer learning into their company culture. It’s a concept that’s instilled from day one, Moore explains. “When we’re talking to members, we ask them to come along to one of our events to have a look ... it’s a core part of when we speak to any new brokers,” he says. Indeed, the very success of the method rests on Choice members helping out. As Moore puts it, “the challenge of peer-to-peer learning is that it’s only as good as the willingness to get involved”.
Therefore, sessions are heavily directed by broker feedback; individuals can suggest topics, and Choice will invite certain brokers to attend. Through this, and brokers’ own self-selection, groups can be aimed at brokers of certain ability levels. Moore mentions local marketing and social media as popular topics for 2015, but also notes that peer-to-peer co-operation now occurs without his prompting: A closed Choice Facebook group allows members to ask each other for advice.
MATURE EDUCATION FOR A MATURE INDUSTRY
In a sense, professional development in the industry has come full circle, from compulsory CPD hours to brokers driving and even conducting their own education. But there’s also been a shift in outlook by some lenders and aggregators, from treating education as a classroom exercise to recognising and respecting increasingly mature and established brokerage businesses.
At their core, all these development methods revolve around flexibility, whether that be fitting learning around business hours with online tools or, conversely, bringing experts into the office. They also are driving improved standards at the entry level, with some training providers and entry-level employers offering far more than the Certificate IV skills demanded by the government.
Pepper’s Rehayem certainly believes so. “If you compare the industry to five years ago, it’s chalk and cheese,” he says. “It’s in a much better position than it has ever been.”
It’s a natural development, concludes Choice’s Moore: “a real recognition that you need to run your business as a business ... it’s a really exciting time for our industry, as they’re becoming true professionals”.
